“As a mom, rising health-care costs are a big concern. My family lost our insurance and doctor because of the Affordable Care Act. But now, we have hope.”
— California resident Elizabeth Jacinto, in an ad sponsored by the American Action Network
In a $2 million ad campaign to support the House GOP health plan, the right-leaning American Action Network (AAN) features a California woman named Elizabeth Jacinto who says she suffered under Obamacare and expresses enthusiasm for the American Health Care Act. The ACHA only narrowly passed the House and was greeted lukewarmly by the Senate, so a key part of the effort appears to assist 21 GOP lawmakers who cast a tough vote to support the proposal.
“The American Health Care Act will fix our broken health-care system.”
In her introduction, Jacinto mentions that her family lost her insurance and her doctor. She provided more detail in an earlier ANN ad, but essentially she was kicked off her plan with Covered California, the state health-care exchange, for no reason. Apparently, this happened to an unknown number of people because of a software glitch.
We can understand why this is a frustrating experience, but it seems strange to blame the problems with the state exchange on the federal law. The AAN defends the reference on the grounds that this problem was a result of the system created by the Affordable Care Act. But the AHCA does not eliminate the exchanges, so it wouldn’t really fix what Jacinto considered broken.
Notably, Jacinto does not complain about high costs under Obamacare, so presumably her rates were acceptable, or she and her family qualify for tax credits. (Jacinto, a registered Republican, could not be reached for comment, and AAN declined to address the issue.)
“More competition and choices, resulting in lower costs and better coverage.”
As backup for more competition and more choices, ANN cited an analysis by its think-tank affiliate, the American Action Forum, that the establishment of a Patient and State Stability Fund will inspire states to set up efforts to encourage insurance companies to “provide consumers with an array of options.” So it’s more of a hope than a reality at this point.
As for lower costs, the ANN cited the Congressional Budget Office report that “by 2026, average premiums for single policyholders in the nongroup market would be roughly 10 percent lower than under current law.” As we have noted before, that does not mean costs will decrease, only that they will increase more slowly than under the ACA. Costs will especially increase for older Americans, as this chart shows.
(The American Action Forum, which is headed by former CBO director Douglas Holtz-Eakin, has made an interesting case that CBO is using an old, flawed baseline (March 2016) and that a newer 2017 baseline would indicate less impact on the number of people without insurance and on health-care premiums. But we need to rely on the baseline used by CBO.)
Moreover, the health-care plans in the ACA and the AHCA are not necessarily comparable. The AHCA would repeal a requirement that plans in the individual and small-group markets have an actuarial value — the percentage of total costs for covered benefits paid by the plan — in one of four tiers: about 60 percent, 70 percent, 80 percent or 90 percent. So, in theory, a health insurer could offer plans that cover less than 60 percent of total costs, which would bring down premiums but also increase deductibles and other cost-sharing payments.
“Families get tax credits to make insurance cheaper.”
Under Obamacare, families up to a certain income level receive generous tax subsidies. Advance payments of tax credits help shield many participants in the exchanges from sharp premium increases because the law establishes the share of income that households are expected to pay.
But the subsidies phase out as income increases. Research by Avalere, a health-care consulting firm, shows that participation in the exchanges declines dramatically as incomes increase. More than three-quarters of eligible individuals with income at 100 to 150 percent of the federal poverty level (FPL) are enrolled in exchange plans, but just 41 percent of those with income between 151-200 percent FPL. Only 2 percent of those making over 400 percent of FPL participate.
The Republican bill would expand the universe of people who would qualify for tax credits but also make the credits less generous for many people.
So, according to CBO, a 64-year-old with annual income of $26,500 (175 percent of FPL) who now expects $13,600 in subsidies from ACA (to help pay for a $15,300 premium) would only get $4,900 from AHCA (and the premium would be $19,400). But people making above 450 of FPL would get subsidies that they now do not qualify for under ACA. The ad thus glosses over the fact that some people would end up as real losers under the law.
“And people with preexisting conditions are protected.”
“Protected” is an odd word choice here. As we have noted, people with preexisting conditions would not be denied coverage. But if they have a gap in coverage, they still could face higher, unaffordable premiums for a year. (Much would depend on what individual states do.) So this is misleading language. (The updated CBO report on the AHCA offering one scenario, for about one-sixth of the U.S. population, under which the protection would be meaningless. We explored that in this article.)
The Pinocchio Test
The ultimate shape of the Republican replacement for Obamacare is still uncertain, if it even emerges from the Senate. But this ad glosses over many details to paint a rather rosy picture of reality. Jacinto — and readers — should be aware that rising health costs are unlikely to be halted under the law as currently drafted.
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